Chapter 1
The Nature and Importance of
Entrepreneurship
➢ Born in Kosciusko, Mississippi in 1954.
➢ Spent her early years in a house without electricity and running water.
➢ Reporter for radio station WVOL in /Nashville’s WTVF-TV as the first African
American anchor.
➢ Enrolled in Tennesee State University to study speech and performing arts.
➢ Coanchor in the six’o clock news
➢ Baltimore’s local talk show “People Are Talking”.
➢ AM Chicago was renamed “The Oprah Winfrey Show”.
➢ Harpo Inc. was established in 1986.
➢ Her choice of people to work with was based on only one criterion: trust.
➢ In 2000, Oprah launched “O, The Oprah Magazine”.
➢ Created a motivational “Live your Best Life” tour that was attended by 8500
women in four cities.
➢ Oprah is an owner and the chair of Harpo Inc., Harpo Productions, Harpo
Studios Inc., Harpo Films Inc., Harpo Print LLC, and Harpo Video. 221 employees
of which 68% are women.
➢ Donates at least 10% of her annual income to charity.
➢ Oprah Winfrey Foundation and Scholars Program.
➢ Initiation of the National Child Protection Act in 1991.
Nature and Development of Entrepreneurship
Entrepreneur
The word entrepreneur is French and, literally translated, means “between taker” or “go between”.
An individual who takes risks and starts something new.
Earliest Period
• Sign contract with a money person (Venture capitalist) to sell his goods
• Venture capitalist passive risk bearer
Middle Ages
• Actor & person who managed large production projects.
• Individual didn’t take risks but only managed the project using the resources provided.
17th Century
• An Entrepreneur being a person who entered into contractual agreement with the government to perform a service or to supply products
• Richard Cantillon “An Entrepreneur is a risk taker, observing that merchants, craftsman, farmers & other sole proprietors buy at a certain price & sell at an uncertain price,
therefore operating at a RISK”
18th Century
• Person with capital was differentiated from the one who needed capital
• An Entrepreneur was distinguished from the capital provided (Venture capitalist)
• One reason for differentiation was the industrialization occurring throughout the world
• Invention developed during this time were reaction to the changing world Venture capitalist - professional money manager who makes risk investments from a pool of equity to
obtain high ROR on the investments
19th & 20th Century
• An Entrepreneur were viewed from Economic Perspective
• ‘An Entrepreneur organizes & operates an enterprise for personal gain
• Pays prices for material consumed in the business, for land, personal services he employs, capital he requires
• 20th Century- Notion of an entrepreneur as an innovator was established:
“The function of the entrepreneur is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological method of producing a new commodity
or producing an old one in a new way, opening a new source of supply of materials or a new outlet for products, by organizing a new industry.”
Innovation & newness integral part of an
entrepreneur. But, Difficult part for an entrepreneur
is to introduce something new
Entrepreneurship
Entrepreneurship is defined as “creating something new with value by devoting necessary time and effort, assuming the
accompanying financial, psychic and social risks and receiving the resulting rewards of monetary and personal satisfaction of
independence.
❑ Process of creating something new and assuming the risks and rewards.
Entrepreneurs Vs. Inventors
An inventor,
✓ Is an individual who creates something for the first time.
✓ tends to be well educated
✓ measures achievement by the number of inventions developed and the number of patents granted
✓ is not likely to view monetary benefits as a measure of success
An Entrepreneur falls love with the organization (the new venture) and will do almost anything to ensure its survival and
growth, an inventor falls in love with the invention and will only reluctantly modify the invention to make it more
commercially feasible. Entrepreneurship is a team approach and the process of implementing.
The Entrepreneurial Process
The process of pursuing a new venture, whether it be new products into existing markets, existing products into
new markets, and/or the creation of a new organization.
Four Phases of Entrepreneurial Process
1. Identification and evaluation of the opportunity
2. Development of the business plan
3. Determination of the required resources, and
4. Management of the resulting enterprise.
No one stage is dealt with in isolation.
Types of Start-Ups
Start-ups can be divided into three categories:
1. Lifestyle Firm:
✓ A small venture that supports the owners and usually does not grow.
✓ May grow after several years to 30 or 40 employees and have annual revenue of about $2 million.
✓ Exists primarily to support the owners.
2. Foundation Companies:
✓ A type of company formed from research and development that usually does not go public.
✓ Can grow in 5 to 10 years from 40 to 400 employees and from $10 million to $20 million in yearly revenue.
3. High-potential Venture:
✓ A venture that has high growth potential and therefore receives great investor interest
✓ Start out like a foundation company but its growth is far more rapid
✓ After 5 to 10 years, the company could employ around 500 employees, with $20 million to $30 million in revenue.
Role of Entrepreneurship in Economic Development
•Drives economic growth and creates new job
•Encourages innovation by bringing new ideas, products, and services to the market
•Contributes to social change by developing products or services that reduce people’s dependence on outdated
technologies
•Addresses social and economic problems by creating solutions that meet the needs of society
•Enables competition which improves business efficiency and lowers prices for consumers
•Raises Standard of Living
•Economic Independence
•Benefits of New Firms and Businesses
Etc. etc.
The Future of Entrepreneurship
As we head into 2024, entrepreneurs around the world are keeping an eye on emerging trends that could
shape the future of business.
✓ Digital and Global Entrepreneurship
✓ Social and Environmental Responsibility:
✓ AI-driven Innovation and Automation
✓ Decentralization and Web3, Blockchain and Cryptocurrencies
✓ Health and Biotech Innovations
✓ Remote and Hybrid Work Models
✓ Venture Capital Evolution, Crowdfunding and Community Funding
✓ The Rise of Circular Economy Business Models
✓ The Expansion of the Gig Economy
▪ The Rise of Circular Economy Business Models
Entrepreneurs who can implement sustainable practices in their businesses, such as reducing waste and repurposing
resources, will be able to tap into a growing market of environmentally-conscious consumers.
▪ The Expansion of the Gig Economy
A gig economy is a free market system in which temporary positions are common and organizations hire independent
workers for short-term commitments. Entrepreneurs who can provide flexible work arrangements and opportunities
for remote work will be well-positioned to capitalize on this trend.
In conclusion, the entrepreneurial landscape in 2023 will be shaped by a number of factors, including the continued
growth of fintech, the emergence of Web3, the rise of circular economy business models, the expansion of the gig
economy, and the emergence of new technologies such as AI.
Thank You